ZPP Newsletter
Warsaw, 3rd November 2021
Shame on the Ministry of Finance for discriminating against Polish companies
- Only 41% of CIT payers reported tax payable in 2018. Among “flat” PIT payers that share was 83%. Entrepreneurs who pay flat tax also effectively pay three times more income tax (in relation to income) than capital companies.
- The budget is being robbed by means of a commonplace CIT avoidance. The resulting deficit will be an even bigger blow to small Polish companies, because as our report proves, they are the ones where the entire tax burden is shifted.
- The Polish New Deal will only strengthen tax disproportions. Entrepreneurs from the SME sector must prepare for tax increases, while foreign investors (96% of whom operate in the form of capital companies) can count on further tax reliefs.
Earlier this year – in August, the Union of Entrepreneurs and Employers published the report “French companies in Poland” showcasing the enormous scale of tax avoidance among the largest French companies operating on the Polish market. Both the conclusions from this report and the enforcement of the New Deal by the government, containing solutions detrimental to domestic SMEs, prompted us to create a study showcasing tax discrimination of the smallest Polish companies.
“We can’t argue with facts. While Polish entrepreneurs, sometimes described by representatives of public institutions as “schemers”, reliably settle their taxes, capital companies seem to be paying their taxes on a voluntary basis,” claims Jakub Bińkowski, Member of the Board and Director of the Law and Legislation Department at the Union of Entrepreneurs and Employers. “And last time I checked we all used public infrastructure and services.”
The data gathered in the report is alarming. It confirms the fact that that there is a huge disproportion between taxation of SMEs and large enterprises. One of the largest mobile operators paid only PLN 30,000 income tax over a 5-year-long period, and a German discount retailer did not pay a single penny over that period, to name just a few examples of activities responsible for the CIT gap – now at PLN 35 billion.
The state tolerating such a state of affairs and practices is all the more irrational given the amount of public aid that corporations receive. In the years 2016-2020, a German car engine factory received almost a billion zlotys from the state and paid merely half a million zlotys in tax.
“Multinational ownership structures are very often used by large foreign players to lower their CIT,” explains Kamila Sotomska, the Union’s Deputy Director of the Law and Legislation Department. “Claiming that tiny taxes are the result of the scale of investments is completely unconvincing. In sectors such as telecommunications or e-commerce, there are gigantic differences in the effective scale of taxation, even though everyone is investing and spending massive resources on development.”
